Tuesday, September 30, 2008

We Have Nothing to Fear but Fearmongering

Here are a couple of examples of the bullyish fearmongering on the part of the powers that be: Yesterday, their servants in main stream media repeatedly said that the no vote on the bailout plan caused "us" to lose a trillion dollars on the stock market. First, no one lost anything except for those who were foolish enough to sell out after the market had plunged. Second, any fool knows that "loss" will be made up eventually -- in the very, very worst case scenario, it will be regained when the fundamentals justify the old, inflated prices. As I write, at eleven the next morning, the Dow has already made up almost half of yesterday's "loss."

Another example: they repeatedly said that yesterday's price tumble was "the largest point drop in the Dow in history." Obviously, the number of points in the drop is meaningless, since the total number of points in the Dow keeps growing. What we want to know is: What was the percentage loss in the Dow? Whenever they reported that, they said it was the biggest drop in seven years.

Forever, versus seven years. That's quite a difference isn't it?

I say we have nothing to fear as much as their fearmongering. -- Especially because it makes it more likely that Congress will enact the wrong sort of repair package.

Monday, September 29, 2008

Are We Stupid, Ignorant Ingrates?

Wow. I just watched TV news shows for an hour or so and I was amazed by the sheer anger of these people. On the Larry King show there were politicians, financial reporters and a personal finance adviser yelling, literally yelling into the camera about how stupid and ignorant and selfish the voters are for revolting against the administration's Wall Street bailout plan.

It was very creepy to watch, as if someone had torn the lid off Hell and I could see the demons howling.

Our masters do not take our disobedience very gracefully, do they? Thank you, Larry King, for showing us their true nature.

One thing that not one of these people has yet mentioned:

Sunday evening, Treasury officials held a conference call for financial services industry players only (!!) which was infiltrated and revealed by bloggers. Thinking they had already won, they seemed to think it was safe to start being honest, and they revealed:

1.) They actually didn't intend to to anything for two weeks. That is, their screaming about how we had to pass this Monday morning, so fast we could not even think about it, were apparently BS of the most evil sort -- I say "evil" because it was apparently intended to disenfranchise us -- to cut us out of the dialogue and keep us in the dark.

2.) The "tranching" provision was "a mere formality," and could easily be gotten around. They could dump all $700 trillion on the affected areas right away.

3.) The CEO pay caps were not a problem. They only applied to new CEOs.

Meanwhile, people who could read faster than me revealed that the oversight provisions the Democrats supposedly got were meaningless. They consisted of two committees. One committee would include people like the Treasury Secretary, the Chair of the Fed, the Chair of the SEC -- the very people who were to be overseen! The other would consistof people appointed by Congress -- and had no power! The oversight involved was was pure BS, in other words.

I am sure these are among the things that turned the House and the public against this plan.

And yet the attempt to emotionally blackmail us continues. I say, come up with a reasonable plan and it surely will pass. This time, the two-party duopoly that rules us and its slaves in the media came up with one that was both incompetent and morally compromised.

The fact that the only proposed solution to the current mess was voted down is a very serious problem. But voting it up would have been much, much worse, and the root of the problem is not the ungrateful, uppity voters think they deserve better than this. It is the proposal itself.
BTW: Here is how everyone voted. I note with sadness that my Representative voted for this thing. My humble recommendation: vote for the noes in November and against the ayes.

There is a God, and Democracy does Work!

Okay, I was kidding about those two things, but the House's devastating vote-down of the Bush bailout plan does show that the American people are not the pathetic doormats the administration takes them to be. It isn't so easy to terrorize them into making a decision that they have no time to think about.

The administration's attempt to turn America into a Mussolini-style corporate state has failed, at least for now.

Big losers here: Bush, Paulson, McCain, Obama, the mainstream media, people who make bad economic decisions. Winners: Ron Paul, the taxpayer, the internet, people who make good economic decisions.

The mini-crash this caused in the stock market was exactly what should be expected -- in fact, it wasn't as bad as I thought it would be. This is what the market should have done two weeks ago, but was artificially delayed by the fact that investors were being offered this gigantic welfare check by Paulson.

Obviously, we should do something, and soon, to fix the system. What we should not do is enable people who have made faulty economic decisions to shove their costs on to people who have made good decisions. That (aside from the obvious ethical issues) would only make the real problems worse in the long run.

Sunday, September 28, 2008

Stop Bailout Madness

It is 8:00 pm Sunday as I write, and the politicians say they have struck a deal. Several have come out to explain what the deal is, but none of it makes any sense. Speaking for the House Democrats, Rahm Emanuel said that the bill exposes taxpayers to no risk "on the downside" and an opportunity "on the upside." What? So they aren't going to take any money from us after all? Somehow I doubt that's what he meant. Then David Boehner, speaking for the Republicans, made it sound like this plan follows the House Republicans' proposal: that it insures rather than bails and does not involve the government buying any bad assets. Again, I don't get it. That description doesn't sound very plausible. If it weren't for John McCain's intervention last week, the House Republicans, the politically weakest and most despised players in this scene, would not have been invited to the party at all. That the big boys would be doing things their way doesn't ring true. That's not how government works.

This seems to be the document, though I can't be sure. I'm getting ready to go to work in the morning and don't even have time to read the damn thing.*

I don't get it, except that I do know the following facts with a reasonable degree of probability:

First, this is a lot of money. Thomas Sowell put it this way:
Many people have trouble even forming some notion of what such numbers as billion and trillion mean. One way to get some idea of the magnitude of a trillion is to ask: How long ago was a trillion seconds? A trillion seconds ago, no one on this planet could read and write. Neither the Roman Empire nor the ancient Chinese dynasties had yet come into existence. None of the founders of the world’s great religions today had yet been born. That’s what a trillion means. Put a dollar sign in front of it and that’s what the current bailout may cost.
Second, this thing, whatever it is, was hatched in a closed meeting. It is not the product of a public discussion. The people have been completely excluded. This is democracy at its lowest ebb.

Third, it is a supposed solution to a profound economic problem, but in the pictures of the meeting I saw, there were no economists present. Not one. This was politicians negotiating about how a pie is to be cut up, and who will get to eat it.

Fourth, this plan is proactive. I have seen no evidence of a crisis on Main Street. I am the proud holder of a brand new Platinum Visa card from Washington Mutual. It was issued just weeks before WaMu became the biggest bank failure in American history. But as far as I know, my card still works. WaMu's failure is a bad thing for a lot of people, and I'm not minimizing that, but so far it has not affected its customers. If you are taking desperate measures to solve a critical problem, they should be solutions to a problem that exists, not one that might exist in the future. Bailout alarmism is like global warming alarmism for Republicans. It is another example of people trying to scare to poop out of us in order to get something out of us.

Finally, all of these people are obviously scared to death to vote for this thing. They jolly well ought to be. We should make sure to vote against every single lawmaker who votes for this, at least if they do so this week, without without real hearings. In that case we will know: it is time for revolutionary change.
* Added Later: Here is some poop on what the deal really means. Be sure to read the point-by-point comments in the "Update" section. They are dead on target.

Saturday, September 27, 2008

Paul Newman, RIP

Paul Newman, blue-eyed boy from Shaker Heights, died today. He was 83, the same age my father was when he died last year.

One of Newman's most enjoyable movies, I always thought is "Sometimes a Great Notion" (1971), which he directed.

It was based on a great novel by Ken Kesey, who some thought looked like Newman. The book was the sort that reviewers used to like to call big! lusty! brawling! -- and the movie was pretty faithful to the book (except for omitting Kesey's experimental treatment of time). Indeed, the opening shot, of the rambling old house on the edge of a thickly forested river, made me gasp because it looked exactly as I had imagined the scene in the novel.

I loved the Stamper family motto: "Never give a inch."

Newman and Hank Fonda play the Stampers, small businessmen, independent loggers who arouse the wrath of a little Oregon town by refusing to support striking workers by suspending work themselves: scab businessmen, in other words, who kill trees and sell their dead bodies. Not the sort of heroes you would expect these two lefties to be playing, but I suppose they must have been more complex and multi-dimensional than that. Or, possibly, ideological lines have been drawn more clearly and rigidly since the free-spirited sixties. Today, it would be hard to imagine someone as far to the left as Newman making a movie that has so many of "wrong" ideas, attitudes, and feelings as this one does. As Nietzsche said, "convictions are prisons," and we are all doing time now.

Here is a heartbreaking scene in which the Stampers, understaffed and struggling, have suffered a devastating accident that probably would not have happened if it were not for the strike:

The First Debate

In the debate last night both candidates agreed that the current government-created economic crisis was the result of "greed," which has to be reigned in. And Obama repeated his seriously weird idea that it was caused by the Bush administration "shredding" regulations. Why does he keep talking as if his opponent were Grover Cleveland, and not a fellow big-government liberal? Oh well, I guess it's a question that answers itself.

Here I can do no better than to quote Lawrence H. White, an economic historian whose specialty is the history of banking (so he does know a thing or two about these things):

(1) If an unusually large number of airplanes crash during a given week, do you blame gravity? No. Greed, like gravity, is a constant. It can’t explain why the number of crashes is higher than usual. (2.) What deregulation have we had in the last decade? Please tell me. On the contrary, we’ve had a strengthening of the Community Reinvestment Act, which has encouraged banks to make mortgage loans to borrowers who previously would have been rejected as non-creditworthy. And we’ve had the imposition of Basel II capital requirements, which have encouraged banks to game the accounting system through quasi-off-balance-sheet vehicles, unhelpfully reducing balance sheet transparency.

This pro-McCain video tells part of the story (make liberal use of the pause button as you watch):

I wonder what made these people think they could coerce private banks to behave like socialist enterprises without harming the banks. Or maybe they thought they could harm the banks without hurting any actual human beings. Or maybe they weren't thinking of it in either of these ways -- but then what?

The really alarming truth of the matter, which is very dangerous for us all, is that twenty years after humanity awakened from the nightmare of state socialism, we on the pro-market side seem to have lost the battle of ideas, if indeed it was ever about ideas at all. As Steve Horwitz explains here.
Added Later: I just thought of something that could make the above-describe-policy, of pressuring private banks to act more like George Bailey charitable institutions, half-way rational. Maybe the perpetrators were thinking something like this: No requirement we place on banks can possibly endanger them, because we have a regulatory system that prohibits them from doing anything unsafe, and requires them only to do safe things. As long as they behave in a safe, prudent way, they can't fail. And if the banks do fail, that is the fault of whoever failed to put these safe-making regulations into the system. Necessarily, if anything goes wrong, it proves that we unregulated, or not regulated enough, for the simple reason that it shows that the regulations that would have saved us were not in place. How many different things are wrong with what I just said?

Friday, September 26, 2008

Those House Republicans are Heroes!

Day One of negotiating the Big Bailout has ended in failure (thank you God! thank you thank you!). Also, rumor has it that over 100 House Republicans who were not invited to this party have let it be known that their constituents are opposed to being robbed in this way, and that they will oppose it.

"We need to get the president to get the Republican House in order," Sen. Charles Schumer, D-N.Y., said on the Senate floor. "Without Republican cooperation, we cannot pass this bill." Schumer said Bush should also "respectfully tell Sen. McCain to get out of town. He is not helping, he is harming. Before Sen. McCain made his announcement, we were making progress." (This from AP news.)

Godalmighty, I hope he is right on both points: that Schumer and his gang of thieves can't bring this heist off without the House Republicans, and that McCain is "harming" their efforts.

Defenders of the bailout argue that if we don't pass their proposal, and do it faster than we can even think rationally about it, consumers will find it too difficult to borrow money to buy new homes. "This is for Main Street, not just Wall Street!" Here you see a graph showing that Main Street's ability to borrow is at record highs. Where is the crisis for Main Street that we should be panicking about? (Hat-tip to Jeffrey Tucker at the Mises Blog. See this article for more discussion of the evidence.)
Added Later: Quote of the week: "We don't have to rush in with the greatest advance of socialism in the Western world," said Rep. Louis Gohmert, R-Texas and a backer of the House Republican proposal. "The only thing we have to fear is fear-mongering from the secretary of the Treasury."

Thursday, September 25, 2008

The Big Steal: No Deal!

This is Arnold Kling, who used to work and Freddie Mac. (Yes that's one of the properties you have acquired in recent weeks. How do you like it so far?) While there, he was doing exactly the job that the Big Bailout would require to be done on an unprecedented scale: rationally valuing mortgage securities. He says that a) this cannot be done on that scale and with these particular assets, and b) the Big Bailout plan "could hardly be worse." Arnold elaborates on this here. (Hat-tip to Reason Hit and Run.)

Wednesday, September 24, 2008

Ignore These Experts!

Jim Cramer of TV's "Mad Money" is on a crusade. Like a lot of others, he is telling us to enact the Paulson bailout plan, but fast, or we will have another Great Depression on our hands. Don't even take time to think about it! Just do it! A lot of people who know a lot about things like the stock market are yelling the same things. Should we accept their expertise and do what they say?

I had an epiphany about this the other day. I was talking to the broker, I'll call him Jim, for one of my investment portfolios, the one that has all of my son's college money in it. Was it seriously damaged by last week's stock market crash? I remember moving a lot of it into cash, partly because I saw an eventual economic meltdown as inevitable, but I couldn't remember how much I had protected in this way.

[I haven't made any new investments in the stock market for at least five years, and have gradually been moving my money into investments that are not as likely to be hammered by hard times. But, partly out of laziness, I had not moved everything out when the dreaded ax fell.]

To my amazement, Jim told me that I actually made $500 during the week of the crash. "What the Hell?" I asked. Well, he explained, that's because the rally on Thursday and Friday was so huge. I thought of the many thousands of market participants taking in the facts, calculating possible results, then buying or selling. What were they reacting too? "Well," I said, "they had just been offered the biggest welfare payment in the history of the planet." "Yeah," he said, "if that doesn't make them happy, I don't know what would." Of course, he said, this bailout rewards people for making mistakes, which is the exact opposite of what markets are supposed to do, but [sighs] I guess it's necessary. Some people even think that we could profit from it, though [laughs nervously] that's pretty optimistic. I'd seen the same New York Times editorial. I said I thought it was hilarious. Still, I found it, for the moment, mysteriously difficult to be strongly opposed to the package. "Well," I said, "it is beneficial to people like me [ie., fools who were still in the stock market]. And it's meant to be." "That's right!" he said. I didn't want to start a big political discussion at that moment, so I left of the end of that next-to-last sentence: beneficial to people like me, at other people's expense.

Holy crap, I thought after hanging up the phone, this is a class thing isn't it? And I'm now a member of the exploiting class. I've already exploited my fellow human beings to the tune of (if I cash out now) five hundred bucks.

Then a bigger realization: Marx was right, it is very natural to think in accordance with your class interests -- what Marx called "ideology." There's no need for conspiracies. Sometimes the question is as obvious as "Who puts the butter on my parsnips?"

Here is the moral of my story. A lot of those "experts," like Jim Cramer, have interests that are very dependent on the stock market and related institutions. That's actually why they are "experts." They do this stuff for a living, a lot of them. Their interests will be served, at least short term, by this latest bailout, if it goes through. You should interpret their words accordingly and take them with a grain of salt. It is really a zero sum game of them vs. you.

Tuesday, September 23, 2008

Is Being Unregulated the Problem? I Struggle with a Conundrum

So the housing market has melted down, the stock market has crashed and rallied, and the banking industry is in such bad shape that it is said to need the largest welfare check ever written. If you haven't soiled your knickers at some point during the past week you are a better man than I am.

Then Barack Obama and most of the folks in the punditocracy said that the cause of it all was that the relevant parts of the economy are "unregulated." My first reaction was: Huh? What century are these people living in? What sector, industry, nook or cranny of this economy has been left unregulated?

Seriously, I've been trying hard to figure out what these people mean, and I have come up with an idea. Bear in mind that I am not an economist and am really trying to figure this out. (If you stop reading this right now, I don't blame you. But we're all stuck in this mess and we have to try to figure it out, experts or not.)

There is one, and only one, regulatory lacuna that I have seen mentioned in this context that looks at first glance like it could be directly relevant. In 1999 the Financial Services Modernization Act was passed. It abolished what was left of the Glass-Steagall Banking Act of 1933, which separated commercial banking from investment banking, and also separated the banking, stock trading, and insurance industries. I'm not sure what the old law prohibited anyone from doing, but obviously the idea is that it was something relatively risky, stuff that could go wrong (more easily than something else).

Right away I have two questions about this. First, this single-cause explanation only explains, at best, something about the banking industry. What about the rest of the mess? Don't you think these things are connected somehow? More seriously, it is obviously a very incomplete explanation. The explanation is: people were allowed to make mistakes. So they did. Well, why? Look, this was a huge number of clever, experienced people who were doing their jobs. And they made a huge number of mistakes. And it was very, very much in their interests to use their cleverness and experience to avoid these particular mistakes. Even more odd, it sounds like they made similar sorts of mistakes. And at about the same time. Pretty interesting, don't you think? Wouldn't a complete explanation be able to explain these things too?

The assumption that they were allowed to make mistakes (that the system was "unregulated" in this respect) is not enough to explain why they did. What does explain it? Some unimaginable conspiracy? Some epidemic brain disease? An invisible ray from outer space? What??

Were there special conditions that encouraged them to act rashly? The answer to this I suspect is: Yes there were, and these conditions were created by the government. The interest rate was kept artificially low by the Federal Reserve bank. This, and various other government policies, regulations, and government sponsored enterprises were designed to pressure the banking system to freely extend credit. In addition, there was the promise of government insurance against the effects of massive mistakes. As Thomas Ekeland and Mark Thornton have said:
The Financial Services Modernization Act of 1999 would make perfect sense in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance; but in the world as it is, this "deregulation" amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly.
On this theory, it's only in the wider regulatory context that the FSMA could have worked its supposedly evil magic. Deregulated does not mean unregulated.

Still, there is room for doubt, at least in my brain, about whether this was a major source of the problem. Do we have banks failing because the banks were buying stocks? I thought the major part of the problem was that they were making home loans to people who were perfectly nice people who deserved to get some money just like the rest of us, except that they couldn't pay the banks back. Making home loans is what they were doing in the supposedly safe old regime of Glass-Steagall. For some reason though they were morphing into George Bailey from It's a Wonderful Life. [It's only in a movie that you would like George Bailey. In real life, you wouldn't want him running your bank. You want mean, rational Mr. Potter -- so that your bank doesn't die.] It doesn't seem like the FSMA could have been responsible for this. Rather, the system -- the regulatory system -- was apparently designed to turn banks into George Bailey. And it seems to have succeeded in doing so.

Further, the demolition of the regulatory wall of Glass-Steagall may have actually had a benign influence on recent events, as Alan Reynolds explains:
If it was somehow possible in today's world of global electronic finance to the rebuild such a wall, that would mean J.P. Morgan could not have bought Bear Stearns, Bank of America could not have bought Merrill Lynch, Barclays could not buy most of Lehman, and Goldman Sachs and Morgan Stanley could not become bank holding companies. It is hard to imagine how things would have worked out in that situation, but it surely would not have been an improvement.
Barack Obama seems to think that our problem is that in a mere eight years those darn Republicans brought us back to real laissez faire capitalism. I don't think that this is the problem for two reasons. First, it never happened.* Second, I learned my economics, such as it is, from Ludwig von Mises (pictured above) and I don't think it would be a problem if it had.
* By the way, the FSMA was a product of the Clinton era.
Added Later: Here is a remarkable article in the New York Times archive (hat-tip to Jeffrey Tucker here). It concerns certain events in 1999, the year of the FSMA. But these events, unlike the FSMA, are clearly relevant to understanding the current catastrophe. The article contains the following stunning remarks:

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

In an "economic turndown": exactly what eventually happened.

BTW, in case I sound like I am picking on the Demos, I suggest you take a gander at this, comments by GWB recorded in 2002. (Hat-tip to Calculated Risk finance blog.) It hardly seems to matter which party is in power any more.

Monday, September 22, 2008

Assaults on Free Speech in This Campaign

In a Chicago Tribune story we are told that the Obama campaign is using a huge computer data-base of supporters and their email addresses to organize efforts to block media messages that they don't want you to hear. This method has been used to try to get television stations to block the above ad. The ad is disturbing, but it consists of factual allegations that are logically relevant (if not extremely so) to the candidate's qualifications. Thus it does not belong in the same category as the fact-free emotional terrorism of Bill Moyers' "Daisy" ad from the bad old days of 1964 (see below) and should be answered. However, at least if Michele Malkin is to be believed (something I admittedly don't always do), the campaign has not alleged any specific inaccuracies in the ad.

The same methods have been used when the Trib-owned Chicago AM radio station WGN booked anti-Obama journalists David Freddoso and Stanley Kurtz. An email from the Obama campain calls Kurtz a " right-wing hatchet man" and describes Kurtz's articles on Obama's alleged relationship with Prof. Ayers (see above ad) as "baseless, fear-mongering terrorist smears." Similarly, in messages inciting the faithful to try to block Freddoso's appearances, they say that he "has made a career off dishonest, extreme hate mongering."

By all other accounts, though, both these men are mainstream journalists. Neither seems to be a defamatory conspiracist muck-shoveler of the Jerome Corsi type.

In the Trib story, Bruce Gronbeck, a U. of Iowa professor who studies political communications, is quoted as contending that these efforts on the part of the Obama organization are legitimate campaign tactics. "The media are players in the process," he said. "If they are a player, the parties are certainly going to try to hold them accountable."

This widely misses the point. The point is not about whether we should feel sorry for the poor radio and TV programmers who got angry phone calls and email messages at a rate of hundreds per hour. They are big boys and girls and can take care of themselves. The point is that the Obama campaign was trying to prevent you and me from hearing someone on the other side making a case for the other side. They were not sending a counter-message, they were trying to block the message-conduit. They were not entering the forum to bravely do battle with the other side, they were trying to shut down the forum.

That a professor of political communications would miss this sort of distinction is distressing. What is more disturbing is that a group of people with no better appreciation no deeper understanding of freedom of speech than Obama and his supporters seem to have may soon have an iron grip on the Presidency and both houses of Congress.

To be fair, the McCain campaign, though different in this respect, is no better. The way Ron Paul and his supporters were treated at the convention in Minneapolis was nastier and bodes at least as ill for this Republic.

The freedom of speech of any one person is a constraint on the behavior of others. Your freedom is the fact that I am not silencing you. If my behavior toward you is not constrained in the appropriate way, then I am not respecting freedom of speech, and any lip service I may pay it is completely meaningless.
For those who are too young to remember it, here is The Daisy Ad:

As I say, though, the Republicans are no better. Though the Demos pioneered this sort of emotional terrorism, the Republicans nowadays do exactly the same thing.

Ticking Time Bomb Explodes, Everyone Surprised

It's no fun saying I told you so, not when what you told us of was a disaster which is now upon us. That's why you don't see Ron Paul gloating about the current financial meltdown.

I suppose ultimately it is probably very difficult for a democracy to have a sensible financial system, once we have made the Faustian bargain of having an institution like the Federal Reserve Bank in the first place. The central bank is both an economic institution and a political one. For political reasons (ie., the continuing power of the politicians now holding power) it will tend to expand credit by artificially lowering interest rates -- especially if there is a war on and the politicians want to "give" the people both guns and butter. This makes debt (eg., bonds) a relatively poor investment, driving money into the stock market. This causes prices to rise, and rise, until people notice that the underlying value is not there, and it collapses. It also inflates the housing market, which is driven by easy credit, until it too collapses. These collapses in turn rock the banking community.

Then the rich and powerful try to force the rest of us to pay for it, and if we do so, they have no reason to avoid doing all the same things all over again.

At this point, there is a glimmer of hope. The proposed Paulson financial institution bailout must represent the largest short-term transfer of wealth (excepting military conquests) in the history of the world. It is, worse yet, a transfer from the relatively poor to the relatively rich. It is just the sort of thing the Democrats should oppose. They control both houses of congress now -- we can hope they will grow a spine and oppose it. Of course, they were well positioned to see the flaws in the Iraq war as well, and you know what they did about that. Still, one can hope.

[Hat-tip to Lew Rockwell for the title of this post. I swiped it.]

Friday, September 19, 2008

The Case of The Jewel of Medina

Philosopher Carlin Romano has an interesting and very sensible discussion of the case of the novel, The Jewel of Medina, which is gaining notoriety even before it is published. (Hat tip to Arts and Letters Daily.) British philosophy blogger Stephen Law has weighed in on it as well.

Briefly, the facts, as they have been reported above and in the opinion piece in the Wall Street Journal that originally broke the story, are these. Over a period of about five years, Sherry Jones researched and wrote a historical novel about A'isha, the third wife of Muhammad, the Prophet of Islam. This project included, among other things, studying Arabic. Random House signed a contract to publish the book and organized an eight-city book tour.

Meanwhile, they sent the galleys of the book to Denise Spellberg, an associate professor of history at the University of Texas at Austin and a specialist in the period in which the novel is set. They asked if she would be willing to write a positive blurb for the book's jacket. Publishers routinely do this as part of their efforts to win favor and sell copies of the book. In this case, it had, to put it mildly, the opposite sort of effect. Spellberg, who later described the novel as "very ugly, stupid piece of work" immediately "warned" (her word, apparently) Random that publishing the book would expose their building and staff to very serious danger, calling it "'a declaration of war … explosive stuff … a national-security issue." At about the same time, she alerted the editor of a Muslim web site about the book and her view that it ""made fun of Muslims and their history." This led eventually to message to an email list and eventually to a wave of angry blogging about this "new attempt to slander the Prophet of Islam."

Random canceled plans to publish the book, apparently breaching their $100,000 contract with Jones.

I see a fascinating ambiguity in the reported facts about Prof. Spellberg's behavior in this case. They seem to be more or less consistent with at least three radically different scenarios:

1. She was genuinely concerned about the danger to Random and was offering them her (unsolicited) professional opinion on this matter in order to be helpful. This would be perfectly unobjectionable, of course. She was not trying to violate another person's freedom of expression, she was only exercising her own. One thing that stands in the way of this interpretation, at least for the moment, is the fact that none of the quotations from the book that have come to light so far seem at all insulting or, to a rational person, morally offensive. From all accounts (except Prof. Spellberg's) it sounds like this book was not meant to be insulting or even critical of Islam or its prophet. We are not talking about The Satanic Verses here. More important, this scenario is not easy to square with the fact that, at the same time that she was helpfully warning Random, she was apparently trying to get that web site editor upset and alarmed about the book. Couldn't she foresee that this could indirectly trigger the very sorts of events that she was supposedly trying to help Random to avoid?

2. Stephen Law suggests that, perhaps, she was fearful of her own safety and made that hard-to-square phone call in order to dissociate herself from the book. Here once again the odd thing is that she seemed to be actively trying to get others upset about the book. That would seem to mean, on this interpretation of the facts, that she was in effect trying to sic the dogs on someone else for the sole purpose of keeping them from biting herself.

3. Yet another possibility is that she detested the book herself and was using the hypothetical violent behavior of others in order to get its publication suppressed. This raises a very interesting ethical issue. We all know what to think of hooligans who break into a newspaper office and destroy its presses because they print things that the hooligans don't like. What, on the other hand, should we think of someone who uses their behavior, and for the very same ends -- to suppress words that they don't like? Suppose that these other people would never do anything violent themselves, and have always deplored such thuggery.

Usually, thugs of this sort don't chop up printing presses with axes simply because they enjoy doing so. Such behavior is a means to an end: they want to silence someone else. If the mere threat of doing this is sufficient to silence these others, so much the better. Thus someone who uses their behavior in order to achieve their ends -- by deliberately communicating and facilitating the threat -- is functioning as an essential working part of the same system of oppression. The fact that they would never dirty their own hands with violence might make their guilt the less, but their shame is more.

In the public controversy about this case, Salman Rushdie deplored the incident as "censorship by fear." On the other hand, Stanley Fish, in his blog, denied that this is censorship at all. Fish holds the theory that the word "censorship" properly speaking can only be applied to governmental suppression. I have never been entirely sure what to think about this sort of issue. But I do know what the present status of Jones' book is: its publication has been picked up by a British publisher, more obscure and with fewer assets than Random, but with much more courage.

Thus the book has been shunted into a more marginal area of the publishing world, where it is apt to get less attention and be less upsetting of the rest of us. This is what usually happens in cases of semi-quasi-censorship. No blood is shed, no property is destroyed, but it is easier to ignore what we don't want to hear.
Added Later: The offices of the British firm that is publishing this book have been firebombed.

Wednesday, September 17, 2008

My Last Post on Sarah Until McCain Does a William Henry Harrison and She Becomes President

The attempt to demolish Sarah Palin has backfired. As everyone knows, every quantum of fury directed against her seemed to push her ticket higher in the polls. Here's another indicator you may not have noticed: her eyeglass frames (Kawasaki 704) flew off the shelves long ago. Retailers, and the manufacturer itself, are all sold out, with a long waiting list. (I know this because Deborah tried to buy a pair recently. She'd look great in them, too.) The leftosphere's loathing of her only seems to make other people like her more.

What have we learned from this? For rhetorical purposes, I'll put this as Advice to Democrats, though I'm not silly enough to think that they will take it, either from me or from anybody else, including non-suicidal Democrats.

Fundamentally, by trying to show that Palin is the wrong sort of person, you, the Dems, turned the debate into a culture war about values. This is a battle you are doomed to lose.

1. Most obviously, Avoid starting any new culture wars. If you think people who shoot moose are icky because that's just so-o-o-o-o mean, please keep this information under your hat. For better or worse, most Americans think a woman who shoots moose is pretty cool. Given a chance, they would be out there shooting moose themselves. So avoid that whole nest of issues and non-issues, please.

2. Stop playing Gotcha! No one cares which one of Bush's awful ideas is so terrible that it is actually called The Bush Doctrine. [If you are indeed halfway interested, here is an article by Charles Krauthammer, the guy who coined the term, and he says that Gibson got it wrong too. Personally, I would have guessed that it was the idea that we have a right to coercively spread democracy around the world on the grounds that freedom can't survive unless it is nearly universal. Krauthammer, if I'm reading him right, says this is closer to being correct than Gibson's version is.] More important, playing Gotcha! makes you look mean. It looks mean because it is mean: only mean people enjoy that sort of petty foolishness. The voters are not going to give you power over nearly every aspect of their lives (which is what elections are really about nowadays, unfortunately) if they think that you and your people are petty and mean. If you really are a mean person, you should hide your nasty little soul from public view until after the election, then spring it on us.

3. Stop basing your case on how stupid your opponent is. For one thing, before you even think of using this strategy, you'd better make damn sure that you are smart yourself. Many Dems who play the He's So Stupid game fall pathetically short of meeting this simple and obvious requirement. The sort of stupidity that doesn't know its own limitations is the only really dangerous kind. Further, I've spent my whole life surrounded by incredibly smart people and I can tell you this by experience: Believe it or not, being smart is not that important. G. W. Bush is not an awful president because he is stupid. True, he is not exactly brilliant, but I believe that is just a coincidence.* He has been awful, not from stupidity, but because he is a "moderate": ie., he lacks an ideological or philosophical compass. As such, he fell under the influence of people with the wrong sort of ideology, a pack of free-spending ex-leftist world-savers who have brought us to the brink of ruin. Nature abhors any vacuum, including the brain of a "moderate." Being smart would not have saved him.

4. Focus sharply on the issues. All the talk about the Bush Doctrine distracted attention from what was really disturbing in that interview: soon after it began, she revealed that she would be willing to go to war with Russia over Georgia. That is, her views on foreign policy are at least as insane as those of Mad McCain. The eyes of the voters should be glued to this terrifying fact, not the BS issue of knowing what the Bush Doctrine is.

It is one of the tragedies of our times that, during the run-up to this war, the only thing standing between us and this war was -- the Democrats. With defenders like that, you are pretty much defenseless. Here, years into the war, their party and their candidate haven't got the guts to declare they will end it at the earliest opportunity -- and bring the troops home, instead of shipping them off to some other Godforsaken Hell-hole.
* On the other hand, I just noticed a blurb on the internet that says that Bush's IQ is 125, which puts him in the top 7 % or so of the population. This actually reinforces my main point of the folly of the He's So Stupid strategy, especially when used by people who are not exactly geniuses themselves.
Added Later: I was going to add that displays of PDS (Palin Derangement Syndrome) had probably bottomed out with Palin's email being hacked into and published on the web, and then I heard of Sandra Bernhard's truly revolting gang-rape comment. I think it is a very interesting question: Why don't leftists seem to realize how really, seriously ugly this looks to people who don't suffer from PDS? This is not a rhetorical question: I really don't know the answer.

Saturday, September 13, 2008

Liberal versus Conservative

Psychologist Jonathan Haidt has an interesting new answer to a rather tired old question. Why, a generation of academic researchers have wondered, do so many relatively low-income Americans, especially in rural areas, keep voting for Republicans, even though their class interests requires them to vote for our boys? Why don't they recognize that we are the ones who can look after them? What's the matter with Kansas, anyway?

Standard answers to this question in the literature are that these voters are in love with hierarchy, rigid, fearful of change, worshipful of authority, or just plain stupid.

I've long wished I could point out to these researchers that another answer to this question is right under their noses: maybe these people don't vote for you and your boys because they don't like smug, patronizing, narrow-minded, stuck-on-themselves jerks like you. This is an amateur opinion, though, based on no empirical research, so no one has any reason to take it seriously.

Haidt and his fellow researchers have come up with an answer that is the first cousin of mine: This phenomenon is about differences in values and in moral character. They have come up with evidence that conservative voters and liberal voters tend to view life through ethical categories that are profoundly different.

Briefly, liberals tend to think of people as individuals bound together my consensual relationships. Morality is a entirely about how one treats others, and is governed by norms like justice and reciprocity. Conservatives think this way as well, but they also think of morality, Haidt says, as something the binds people together into groups. Conservative moral responses are often governed by norms like authority and loyalty, as well as sanctity, purity, and the sacred. Liberals are Millian, conservatives are Durkheimian. Liberals are individualists, conservatives to some extent are tribalists.

Liberals and conservatives, according to Haidt, fail to understand each other because they are speaking different moral languages. Conservatives tend to use more of the full spectrum of moral responses that are available to human beings, and liberal discourse accordingly often has a thin and tinny sound to them.

I find this fascinating, but I am a little worried that Haidt has not interpreted his findings rightly. He argues that liberals might be able to get more conservative votes if they use more of the full spectrum of moral concepts -- apparently including, if I understand him rightly, seeing the criminal justice system as having a "quasi-religious importance" and seeing the state as "guarding the precious coherence of the whole" of society. I don't think that this would be to speak to conservatives in their own language at all.

Let me put it this way. Suppose that he had asked his informants to rate from "strongly agree" to "strongly disagree" a statement like Public officials have our best interests at heart, or maybe People who run governments are more likely to have good intentions and be well informed than people who head other sorts of organizations, such as families or business corporations. This is only a guess, of course, but I bet that liberals would agree with such statements more than conservatives. If that is so, I would take this to mean that liberals are the ones who are most likely to think of heads of state as a morally privileged priesthood.

It is true enough that conservatives sometimes seem to base policy initiatives on religious considerations. It is partly for religious reasons that they want the state to pursue, capture, and punish doctors who perform abortions (and perhaps the women who have them performed as well). Religious considerations might also be part of the reason why they are so interested in having the state torture and kill jihadists. But they don't think that these policies would bring more virtue into the world, nor that they would in any other way make the world a positively better place. These policies are purely negative moves against (as they see it) injustice and evil.

Of course the values they associate with the family are important to them, but that is why they have families. They want to get in touch with the sacred, but that is why they go to church. They don't go to the state for such things.

On the other hand, liberals do seem to see the state as closely associated with virtue and moral purity, and as a source of not merely happiness but to some extent of the very meaning of life itself. Conservatives often allow the state to overlap with the church, while liberals want the state to be a sort of church. I am just guessing here because, as may be obvious, I am neither a liberal nor a conservative myself. But this, from this outsider's view, seems to be part of the difference between them.

Photo by author: Ruined Bingo Grain Co. Silo, Oakaton SD.

Wednesday, September 10, 2008

Entertaining Mike Gravel Interview on Palin, etc.

I have not been following the career of Mike Gravel, but this interview makes me wish I had. Please take special note of the part at the end about the Democrats' responsibility for the war. From the evidence here, he seems like a genuine Freie Geist. Go thou and do likewise! (Tip o' the sombrero here to David Beito.)

Schopenhauer says somewhere that the next time you are stuck in a boring conversation you should try this trick: pretend that you are in a theater, listening to a dialogue between two fools. Suddenly the horror becomes a delight. From what I see here, Gravel is no fool, but this thought, of turning life into art by means of de-realization, will be a great comfort to me as we hurtle at super-sonic speed toward the brick wall of November. After the Schopenhaurean move, American democracy is no longer a nightmare I can't wake up from. It's pure entertainment, the greatest show on Earth.

I have nothing to add.

Saturday, September 06, 2008

The Fraying of America: An Explanation

I know this sounds obsessive, but I am still thinking about the flood of invective recently aimed at Sarah Palin and members of her family in the left-leaning parts of the internet and mainstream media. It was rather startling to those of us who were not taking part in it.

Public discourse in this country, whether it involves an election campaign or a Supreme Court nomination, is often a festival of invective, character-assassination, and incivility. I am tempted to try to accumulate more examples but the problem with that is, since this is a broad cultural phenomenon and we are all part of it, the natural reaction will often be something like, "well that one's not a good example, because those particular bastards had it coming."

But surely examples are not necessary. American leftists must know in their hearts that for at least six or seven years their attitude toward GeorgeW. Bush has been one of more or less pure hatred. And those on the other side can remember the eight years of Clinton-hating that preceded that.

The neo-Tocquevillian idea that participating in the modern democratic state is something that draws us together into a national conversation about common goals and aspirations is turning into an ugly joke. What I see, more and more, is mutual hatred and suspicion.

Admittedly, there have been times when the level of discourse was in some ways much worse than it is now. It was no doubt worse on the day in 1855 when Congressman Preston Brooks of South Carolina beat Senator Charles Sumner senseless on the floor of the Senate with a walking stick. There is another way in which those days were different, aside from being even more angry and hateful: in those days, there was an obvious reason for that anger and hatred. The single issue of slavery set citizens against each other in conflict that admitted little or no compromise.

Today, there is no such single issue. There is a reason, though, and it is one that in a subtle way may be worse that the one that underlay the Brooks-Sumner sort of conflict.

Today, it is the system itself that sets people against each other. When we participate in any political process nowadays, we always face opponents who seek to impose some coercive policy or other on us. They may want to to spread American-style democracy by deadly means around the world, in your name and at your expense. They may want to provide free health care for all, a policy that is not by any means free. They may want the police to scare you out of your dependence on a variety of substances, from heroin to trans-fats and beyond. The policies I have in mind vary widely, but they all have one thing in common. In every case someone seeks to to achieve some goal that is their and not yours -- whether that goal is to line their own pockets or achieve their personal vision of the good society -- at your expense. There is no way to see this as a positive-sum situation. One man's gain is another's loss. If they win, it is because you lose, and vice versa.

We have reversed von Clausewitiz: Politics is civil war carried out by other means. The really sad truth is that our mutual hatred and suspicion are well grounded and more or less rational.

We, the rest of us, the world minus you, really are your enemies. Every time there is an election, we are trying to thwart your interests and ideals by coercive means and force others on you instead. Aside from the handful of individual rights codified in the Bill of Rights, there really are no limits to what the rest of us are willing to do to you, and will do, if we get the chance.

Of course, alternative systems are conceivable. I can conceive of at least two: 1) We might let the nation state disintegrate into smaller and smaller units, until any given state is inhabited only by people whose interests and standards of value are perfectly harmonious. In many cases, the number of these fellow citizens will be exactly one. This I admit is not very practical. But there is an alternative. 2) We could limit the powers of government to only doing things that are genuinely in everyone's interests, such as maintaining public order and providing certain other "public goods."

I realize we are not going to do either of these things any time soon. But then I do not anticipate the return of civility any sooner than that.

Thursday, September 04, 2008

Shameless Self-Promotion

Here is a nice review by David Gordon of a new book that I am in. Here Amazon lets you search inside the book. You can buy it from them at the hair-curling price of $79.95 -- and up! (What is that all about, I wonder?)

My role in this project makes a rather odd story. The editors wanted to have an equal number of defenders of anarchism and minarchism (the state can be a just institution, but only if its powers are seriously limited). Without asking me, they assumed I am a minarchist. When I turned my essay in, they were disappointed. I argue that the justification of the state is a serious problem that must be faced, but proposed no solution to it.

My view is expressed very well by Tom Paine when he says: "Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one." I consider this an anarchist view, inasmuch as it means that the state is not a morally legitimate institution, that it is intractably problematic from an ethical point of view. Come to think of it, I will go one step further than Tom, because I am not so sure that this evil is necessary.

Anyway, I said they should put my essay in the anarchist half of the book. They didn't want to do that, because the table of contents would then be lopsided: 4 minarchist to 6 anarchist. They ended up leaving it in the minarchist part, but making it the lead essay, so it would be a sort of introduction to the rest. Not a perfect solution.

I'm sorry to cause all this confusion. I used to be a minarchist, but decades of dealing with real government have convinced me that the dominant characteristic of the state is what Ortega y Gasset called its "harshness."

Press and Republicans Stiff Ron Paul, Again

Various news sites have been running an AP story with the headline, "Hundreds Gather for Ron Paul Rally in Minneapolis." Hundreds? Over ten thousand ... that's ten thousand people attended this event, from which my wife Deborah just returned. A Ron Paul event that only attracted hundreds of cheering supporters would indeed be a newsworthy anomaly. Curiously, some sites are running a story by the same author that replaces the "hundreds" with "thousands." But many sites, including Yahoo News, Las Vegas Sun, CBS News, U S News, and ABC News, are only running the "hundreds" story.

Meanwhile, the Republicans have not only rebuffed Paul's request to address the convention, they have refused to physically allow him in the building unless he a) calls and tells them exactly when he wishes to come in and b) comes alone. (This is a sitting Republican Congressman we are talking about, mind you.)

Here we see far-flung agents acting harmoniously against the public good. This is just the sort of thing that people invent conspiracy theories to explain. But there is no conspiracy here. These people don't need some murky Trilateral Commission to tell them what to do about the most prominent remaining critic of the war.* To them, it's obvious.
* I assume that Obama, who is "moderating" his views on this issue and has made a pro-war Democrat his running mate, has vacated this position.

Tuesday, September 02, 2008

Secession is a Right

In the truly amazing flood of abuse unleashed against Sarah Palin and her family in the progressive portions of the press and the internet over this unforgettable Labor Day Weekend, one of the less vitriolic bits was the claim that she is a "secessionist nut case" because she once belonged to the Alaskan Independence Party, which holds that the process that made Alaska a state in 1958 was not legally valid. This, unfortunately, turns out to be untrue (the McCain campaign furnished a document that seems to prove that she has been registered as a Republican continuously since 1982, long before she allegedly belonged to this "fringe" party).

I say "unfortunately," not because I want to join in the recent hatefest, but because I believe that secession is an human right.

Why is secession "nutty"? Is everyone in this country so young they do not remember the secessionist movements in Latvia, Estonia, and Lithuania? Does nobody have any conception of how many secessionist movements there have been?

I think it would be a good thing if a powerful secessionist movement were to arise, forcing us at last to discuss this issue. You might think that secession is a dead issue in this country, but when did it become so? The issue was never settled as a result of judicial or legislative processes, nor of rational discussion. It was settled, so far as it was, by the brutal means of war. As Bertrand Russell famously said, war does not determine who is right, only who is left.

Until the Civil War, secession in this country was perhaps most often associated, not with the cause of slavery, but with the New England abolitionists like William Lloyd Garrison (Wikipedia photo, above). They wanted the North to secede from the union. Then they would no longer have to obey the monstrous Fugitive Slave Law, which required them to return escaped slaves to their "owners." In time we could have ended slavery without a war that killed more Americans than (to this day!) all America's other wars combined.

The issue of secession raises important questions about the nature of the state. Is the state really an organization whose members members have no right to resign? Could there really be such an organization? What could give it such extensive rights over the freedom of its members? To my way of thinking, insofar as the Civil War answered these questions, it answered them in the wrong way.

Abraham Lincoln said that preserving the union was more important for him than ending slavery. I have always thought that this showed a grotesquely distorted sense of values. It meant that his right to force people to belong to the organization he headed is more important than the black man's right to be free.

People have pointed out that Palin's alleged belief that states have a right to seceded from the union is inconsistent with McCain's idea of "country first." That of course is true. But doesn't that phrase epitomize McCain's belligerent nationalism? Shouldn't we be glad if he has added someone to the ticket who dissents from it? I'd like to see a politician who says freedom first, justice first, or peace first. Country? For me, it doesn't even belong on that list.

[Note: I am not a Republican, do not intend to vote for the McCain-Palin ticket, and I am not arguing for anyone else doing so. If you comment on this post, please talk about secession and not whether either of these people ought to be elected. For the moment, that is off the topic.]